Portugal: Lidl is preparing for difficult times

Discount Retail Chain Lidl Portugal (owned by German Schwarz Gruppe) plans to invest up to 180 million euros this fiscal year, investing in 24 stores and improving the yields of its 7,500 workers.

Lidl is "preparing for difficult times", admits Alexander Frech, Lidl's CEO. Precisely a year after taking over the leadership of the food retail chain, a pandemic breaks out and the country goes into confinement and the economy begins to skid, impacting household income. The most recent measures to contain the spread of the new corona virus also did not pass by the German discount chain that saw supermarkets close last weekend from 1 pm.

However, the discounter has, in this period of crisis, gained market share. It was the only one, together with Intermarché, to strengthen its share until August. Fruit of the bet in the expansion of the chain of stores and in an assortment more and more Portuguese, believes Alexander Frech.

In this fiscal year of 2020, which ends in February, Lidl expect to invest between 150 to 180 million euros (US$ 179 - 215M) renovating and opening 24 stores. At least four are new stores, the next one is already in December, in Braga, and, in a time of crisis, it has taken steps to ensure that, next year, the 7,500 workers in the more than 250 stores and 3 logistics centers, will have salary increases.

Measures at a time when the economic situation makes the discussion about the increase in the minimum wage, forecast for next year, even more lively. "I cannot speak for others, but I hope that our approach is a signal for other companies, who have the possibility of making this type of investment, to do so too".

At the beginning of the pandemic, the rush to stores generated record revenue levels. In September, 36 million euros (US$43M) more were spent on the discounter than a year ago. Was it repeated in the following months? Will it remain until the end of the year or is the money available shortening?

People need to eat. In the first phase of the pandemic, with schools closed, with almost everyone telecommuting, with restaurants and bars closed, there was a change in consumption for supermarkets, so the market is growing and we are seeing these numbers. If the Government's restrictions continued in this direction, of course there will be greater demand in supermarkets, but at the end of the day, it is a change within the different channels and sales. Money is getting shorter, I think it is evident, the economy is in crisis, we still don't know how big it will be, the price orientation will be increasing. Lidl will have more sales, the question will be what kind of products will we sell more than before covid.

There will be a shift towards cheaper products, but also in the investment made in security systems. At Lidl we invest a lot in the safety of employees and customers - we were among the first to introduce the visor, acrylic separations, traffic lights at the entrance to ensure that we do not reach the maximum number of customers per square meter in cleaning. Just to have an idea in these 9 months we spent 9 million just to ensure the safety of teams and customers.

In the last few years, even before the covid, we have always been growing a little above the market and gaining share. We are reaping the rewards of our investment in people, in infrastructure, in stores and in its modernization, in the assortment, in greater Portugal. We were also among the first to implement security measures. Customers appreciated that, so we’re doing better than others.